salesforce.com FUD on Microsoft CRM R&D… Some fun facts…


There are several competitors I see every days and other competitors we very rarely see. Some of them are fun to compete against and some play dirty. The ones who play dirty always make me laugh.


So salesforce.com has a document that they email to prospects that tells them why Microsoft CRM is the wrong choice for their business.


My favorite line in there is that Microsoft spends more on Xbox R&D than CRM R&D. While I am not privy to any number to prove or disprove that, here are some numbers I do know. That the video game console business is a $30 Billion dollar a year business. (According to numerous studies I have read.)  


You know how big the CRM Market space is? In 2006, the CRM market will be up to $12.6 Billion, of which approximately 37% will be from licenses. So all of the software publishers out there will split about 4.5B in CRM revenue.


Last time I checked, 30 Billion was MUCH bigger than 4.6 Billion. So it makes sense we should spend more on Xbox than CRM.


So speaking of R&D Spend, let’s talk about Salesforce.com’s R&D Spend. How about 9.8 Million in 2005, 7.0 in 2004 and 4.6 in 2003. (For a Total of $21.4 Million or so.Page 16 has the numbers if you have ADD like I do… )   How much does Microsoft spend on R&D?


“During fiscal years 2003, 2004, and 2005, research and development expense was $6.60 billion, $7.78 billion, and $6.18 billion respectively. Those amounts represented 20.5%, 21.1%, and 15.5%, respectively, of revenue in each of those years.”


 


So the source of that material is Microsoft’s 10k. You can find it here.


So here is the fun part of the quiz. Do you think salesforce.com’s CEO spent more on housing for himself or R&D? I ain’t that good with math, so why don’t you do it for me. J


The City House: 27 Million


The Get Away:    13.5 Million for Land


                        8.0 Million for Construction Costs to Date


Grand total:        48.5 Million


So that is about TWICE what they spent on R&D from 2003 until 2005 in TOTAL R&D spend and THREE times what they spent to acquire Sendia.


So I wonder where Marc’s priorities are.


 


06-08-06: Updated Microsoft’s R&D Spend to the offical source instead of a news article.

Comments (13)

  1. DJ says:

    You should have quit while you were ahead. Do you really want to get into a company officer ‘spending’ fight when you have the spending of the richest man in the world to compare?

  2. Ben Vollmer says:

    DJ,

    I guess you have never known me. :-) Because if you did, you would know I have a wicked sense of humor. And yes the last part was my lame attempt at humor.

    And Bill’s house is supposed to be worth about $125 million… http://en.wikipedia.org/wiki/Bill_Gates (About Mid Way down.) And since he is one of the world’s richest men, why can’t he spend a ton on housing? :-)

    So factoring that in, his house costs less than 1/4 of 2005’s R&D and less than 10% of 2007’s planned… Vs. 2x or 3x for sf.com’s CEO…. :-)

    Now lighten up a little… :-)

    Ben

  3. Brian Begley says:

    Thanks for bringing these facts to our attention – Most of these comptetive documents that software publishers put out pick on the tiniest of factors to try and make their software look superior in all ways to the competitor.  

    Since they are mailing this competitive email out to all their prospects, I’d say that it is a public document – How about you post the entire email so that we have the info we need to compete against Salesforce.com

  4. Bill F says:

    Wow, Ben just put DJ back in time with that back hander…

    I swear some people read MSDN blogs just to FUD Microsoft.

  5. MattNC says:

    The whole salesforce.com vs. Microsoft thing reminds me of an interview I once saw with a previous CEO of Bank of America. He was responding to critics of his bank’s customer service and he said, “Hey, I can understand that as the biggest retail bank in the country we are going to attract a certain amount of criticism — but we are the largest for a reason: we have attracted more customers than the competition.”

    I think it’s great that there are strong competitors out there like SF, etc., but don’t they realize that they are potentially alienating the millions of people who have been happy with the software they purchased from Microsoft? Benioff’s wisecracks may appeal to people who are already disaffected from Microsoft — and certainly there are a lot of them, as there would be for any company with hundreds of millions of customers — but are they gaining him any ground with the greater number of loyal Microsoft customers?

    Just build a better mousetrap and let it stand on its own merits. If you can.

  6. Ben Vollmer says:

    Matt,

    Thanks. I love competitors… Always have and always will.

    The CEO’s over the top style appeals to some and not to others.

    I think that Microsoft CRM is a pretty cool mousetrap. Is it the best?

    Again, go back to cars…. Is my Audi the best car? For me, yes. I have owned 7 of them. They drive nice, they look nice and mine sounds nice too. :-) But for my wife, her Nissan is the best car for her. To each his or her own.

    But comparing her Nissan to my Audi is like night and day. To different customer segments, they are the better cars for them. :-)

    But the second Nissan tells me why an Armada is better than an A4, I am going to kick them in the shins. :-)

    Thanks for the comment… :)

  7. Sean D says:

    Well, I am not convinced of the hosted model and we are moving from SFDC Professional Edition to CRM 3.0 as we want to own our database and adding annual licensing per user is not (in our business) is not a good model.  It gets VERY expensive on a per user basis.  We have used SFDC for some time and it does have major shortfalls and all the hype about appexchange is only really if you have Enterprise Edition, CRM 3.0 here we come (sorry Marc!)

  8. Tom Stephano says:

    While its true microsoft is the bigger company, the on demand or what is called SaaS market is owned mainly by salesforce.com, rightnow, netsuite and a bunch of smaller players such as salesnet, salesboom.com and entellium.

    Microsoft and even SAP are having tough times at it, and they will always do in my mind. i dont doubt that ms or sap will own a bigger slice eventually, but never in the small business sector. Oracle will eventually buy sfdc and the others and larry will be laughing last!

  9. blogx says:

    Ben – I figured that you had to be an Audi guy too.  

    When you said $1.1B in R&D, did you mean for Dynamics or total R&D?

    Not to be a stickler for details, but I did some research and found out:

    "During fiscal years 2003, 2004, and 2005, research and development expense was $6.60 billion, $7.78 billion, and $6.18 billion respectively. Those amounts represented 20.5%, 21.1%, and 15.5%, respectively, of revenue in each of those years. We plan to continue significant investment in a broad range of research and product development."  

    I found this info in the 2005 10-K. There is no other reliable info on the internet that I could find (using MSN Search) showing the correct R&D spending.  Note that SteveB recently announced spending another $2B on R&D for Google related R&D.  

    I guess that this means that even Marc’s house is a rounding error for what MS is spending.

  10. Ben Vollmer says:

    Dave,

    Thanks for the comment. Audi’s and I have been together for almost 15 years. I normally drive them until the wheels fall off. The A4 is my 7th or 8th one. (I also used to buy REALLY old ones. :-))

    I did a google/msn/live search while doing the article. Thanks for your comment and I have updated the article to point to the 10-K. :-)

    The amount spent on R&D reminds me of a McDonald’s sign… Billions and Billions spent. :-)

    Another cool source of reading would be this little gem I found as well. http://www.microsoft.com/msft/download/Ballmer053106_NYC_Bernstein.ppt

    Enjoy!

    Ben

  11. Ben Vollmer says:
  12. ProjectThunder says:

    Hey no one is percect but I don’t know about you guys but Bill Gates has made me and everyone I know boat load of money with Visual Studio and Windows. He also spends more on research so mother’s in Africa that don’t have access to Doctors can save 28 million lives a year from Malaria with needless injections. As soon as the sales force guy can do anything remotely close to that. Then we won’t tease him!

  13. David Fox says:

    I signed up to Salesforce (Enterprise) in October last year but every time I tried to dig into it I lost interest because the browser makes for a sloooow experience. I went to a few Salesforce events and Benioff got me excited about the potential every time – but thats about it – more potential than actual at this stage…